Speech by DAP Member of Parliament for Bandar Melaka, Mr. Lim Kit Siang, when speaking in the Dewan Rakyat on the debate on the Malaysian Rubber Exchange and Licensing Board Bill on 17th August 1972
DAP makes two-point proposal to help rubber smallholders
This Bill provides for the establishment of the Malaysian Rubber Exchange and Licensing Board to have overall control of all activities relating to the registration, licensing, export, shipping, packing and dealing in rubber, and the co-ordination of all activities in the marketing of rubber with a view to promote the efficient marketing of rubber from Malaysia.
Yesterday, the Minister of Primary Industries, when introducing this Bill, said that Malaysia had not until now sought to change the present antiquated rubber trading pattern because it was getting a fair return for its capital and labour invested in the rubber industry.
But of late, the price of rubber has reached its lowest level in 23 years. The Hon’ble the Minister of Primary Industries said that at these prices, the more efficient estates could make a fairly reasonable return because of their economies of scale and foresight. The smallholders, however, who number half-a-million, had not replanted to the same extent as the estates and had suffered greatly.
The government’s awakening to the rubber marketing problems, however, does not seem to have been caused by the great suffering of the rubber small-holders, who had undergone hardship and exploitation in the last decade.
What has prompted the government to action is more the drop of Malaysia’s foreign exchange earnings, rather than the sufferings of the smallholders.
In 1969, Malaysia’s foreign exchange earnings from the export of rubber amounted to $1,940,000,000 or 48 per cent of its total export earnings. In 1970, rubber production was more than in 1969, but its foreign exchange earnings from this source was only $1,663,000,000 or 40 per cent of the total export earnings.
This is what opened the eyes of the government, who had remained in sleep for the last decade, and not the long-suffering plight of the smallholders.
The government has not spelt out in detail as to how it proposes to re-organise the rubber market, but the DAP warns that the whole operation of this Bill and other rubber Bills will be defeated if the smallholders and the rubber estate labourers do not receive any material gain in significant increase in incomes and earnings.
In this connection, I wish to make two proposals to directly assist the smallholders.
Firstly, the government should raise the rubber replanting grant to smallholders from $750 to $1,050 per acre, in view of the higher cost of materials and labour.
Secondly, the government should abolish the replanting cess for smallholders, particularly in view of the present low prices.
The Finance Minister, in his Ministerial statement to this House on 8th August, said that the Rama Iyer Committee which was charged with the task of devising a national policy for the Malaysian rubber industry had looked into the possibility of reducing the replanting cess for smallholders in view of present low prices.
The Committee, however, was of the view that such relief would not necessarily accrue to the smallholders, but would instead benefit dealers and other market operators because of their hold on the smallholder.
Firstly, this seems to be a confession on the part of the Government itself that the series of proposals and their implementation will not help the smallholders in any manner from releasing them from the control of traditional dealers and market operators. This seems to be a very ominous way to start a cleansing of the rubber market.
Secondly, if the government is convinced that it can cleanse the rubber market to the benefits of the smallholders – and if it does not have this confidence, then it has no business to come to this House with concrete proposals framed in the form of Bills – then it should be able to ensure that the relief provided in the form of abolition of replanting cess during low rubber prices should directly benefit the smallholders.
The estate labourers in this country have been completely forgotten by the government and policy makers in the present review of the entire rubber industry.
This is typical of the attitude of the Government, which is a government of the upper class and therefore uninterested about the sufferings of the lower classes of people.
The estate labourers who devoted the best part of their lives to the building up of the rubber industry, and they have always been exploited and denied a fair share in the economic returns from rubber industry.
What is more, an average of about 10,000 of them is being retrenched from the estates, without any governmental concern or assistance.
This is a very callous and heartless treatment of a section of our people who have contributed their part to the development of the economy of the country.
For instance, I remember that in May, I had taken up with the Minister of Labour and Manpower about the problem of re-employment of retrenched estate labourers.
There are estate managements which refuse to re-employ retrenched estate workers even when there are job opportunities, on the ground that they are prohibited by the Ministry of Labour because of the racial imbalance in employment.
This is clearly in contravention of the spirit and latter of the Second Malaysia Plan which pledges that in the new economic policy, “no one will experience any loss or feel any sense of deprivation of his rights, income, job or opportunity.”
I gave an actual instance to the Minister of Labour and Manpower, and asked him to issue a directive to all estate managements to give priority of employment and re-employment to retrenched estate workers to help this group of unemployed. But to this date, not only have I not heard from the Minister, he had also not given this directive to all estate managements as a concrete step to help the hundreds of thousands of retrenched estate labourers in the country. Probably, he is too busy fighting for his survival in his own party.
Both the Finance Minister, in his Ministerial statement on the 8th August, and the Minister of Primary Industries when introducing this Bill, have no word or thought for the estate labourers, although both admitted that the estate have no difficulties in earning favorable returns at even such low prices as 40-50 cents per 1b.f.o.b. or 88-110 cents per kilo f.o.b.
I call on the government that in its present formulation of a new rubber policy, it should not continue to ignore and neglect the estate workers, but should have a special scheme to raise their incomes and assist the retrenched estate labourers to find alternative means of livelihood, either by land settlement or other employment opportunities.
It is precisely because the estate workers constitute an important element in the rubber industry that I hereby propose that the Malayan Rubber Exchange and Licensing Board should be broadened to include 2 representatives from the estate workers, so that the voice and interest of estate workers can be heard and advanced. This is particularly pertinent as rubber accounts for 26% of employment in our country.
Before I leave the subject of estate workers, I wish to take this opportunity to urge the government to protect estate labourers from being swindled by unscrupulous persons who are trying to make a fast buck from their woes and misfortunes.
Fragmentation had created increased unemployment in the estate sector, and the government has advanced millions of dollars of interest-free loan to the National Land Finance Co-operative Society to buy over estates. There are however disturbing reports of malpractices, mismanagements and corrupt practices which the government must put an end to-not only because public money is involved, but to protect the estate labourers’ meager savings which they put into the Society on their participation. The government must appoint a special committee to inquire into the workings and malpractices of the National Land Finance Co-operative Society to protect the helpless estate worker from jumping from the frying pan into the fire. The government should not allow the fact that the National Land Finance Co-operative Society was a thinly-disguised MTC project to deter it from doing the right and proper thing in the interest of the estate workers in the country.
Repatriation of Profits Abroad
Another aspect which the government has conspicuously omitted in its general review of the rubber industry to find new answers is the question of repatriation of profits from the industry overseas.
According to a recent report, seventy-five percent of the investment in the natural rubber industry is owned or controlled by foreigners, who over the past seven decades when rubber was commercially produced at the turn of the century, have not only recouped their initial capital outlay, but made billions of dollars of profits and repatriated them back to their home countries.
Even today, it is variously estimated that the total capital repatriated abroad from the entire Malaysian economy is in the region of $700 million to $800 million.
This is a colossal sum, which represents one-fifth of the total federal budget expenditure yearly. This also means that since Merdeka, we have allowed a few billion dollars to be repatriated abroad!
If the bulk of the repatriated profits are retained inside Malaysia, and ploughed back further investment, it will greatly accelerate Malaysia’s economic growth, whether in the rubber industry or other industrial or agricultural sectors, leading to a bigger gross national product and creation of more employment opportunities to counter the grave unemployment problem in our country.
It is highly regrettable that up to now, the Alliance Government has given no attention to this serious problem of repatriation of profits abroad, which has such a great impact on the economic growth and development of our country.
National interests demand that there must be a check to uncontrolled and unbridled repatriated of profits abroad. Such repatriation must be regulated to ensure that more of the capital is retained in our country for accelerating our general economic growth. This will result in an increase in Malaysia’s foreign exchange earnings.
I propose therefore that a Parliamentary Committee with representative from Members of Parliament from all political parties be set up to study this problem of uncontrolled and unchecked repatriation of profits abroad, whether from rubber, tin or other economic sectors, and to make recommendations to the next session of Parliament as to the best means of regulating it to ensure that there is optimum retained profits for ploughing back in Malaysia to generate greater economic growth and create more opportunities. A happy medium will have to be struck to raise the retained profits in the country, as it is the seed-corn for expansion, without discouraging foreign investment.
International Rubber Salesmanship
Malaysia needs a more aggressive salesmanship of her natural rubber to counter the challenge posed by synthetic rubber in the world market.
Synthetic rubber made great inroads into the world rubber market. Thirty years ago, natural rubber dominated 95% of the world rubber consumption, leaving 5% to synthetic rubber.
Today, 30 years later, natural rubber’s share of the rubber market has fallen from 95% to 35%.
For Malaysia to meet the challenge from synthetic rubber, Malaysia must not only concentrate on high-yielding clones, the rationalisation of the rubber market, the discovery of new end-uses for rubber, it is also necessary to have an aggressive international salesmanship of natural rubber in the world market.
I understand that the consignment which PERNAS dispatched to China recently was of deteriorated quality, and was subject of claim of compensation by the Chinese authorities. This is surely not the way to boost Malaysia’s rubber sales in China, or in the world?
I suggest that the government should train a team of expert salesman of rubber and post them in the key industrial capitals. As the People’s Republic of China holds a great potential as a rubber market, I suggest that the government should immediately set up a rubber mission or office in Peking to co-ordinate and organize rubber sales.
From today’s press report, our Prime Minister, Tun Abdul Razak is going on a visit to Moscow. For our national interest in boosting rubber sales, which constitute the lifeblood of our economy, Malaysia should have no qualms about setting a permanent trade or rubber mission in Peking and Canton.